Understanding the appraisal report is a crucial first step in challenging a low home appraisal. An appraisal report is a comprehensive document that provides an estimate of your property’s market value. Here’s how to understand and review it:
Key Sections of an Appraisal Report
- Property Information: This section includes basic details like the address, legal description, year built, square footage, and number of bedrooms and bathrooms.
- Neighborhood Analysis: This part describes the neighborhood, local market conditions, zoning, and factors like urban, suburban, or rural settings.
- Site Description: This includes the size of the lot, landscaping, and any unique features of the property site, such as waterfront or mountain views.
- Improvements Description: Details about the house itself, including construction quality, condition, home improvements, and any unique features.
- Comparative Market Analysis (CMA): The appraiser lists comparable properties (comps) that have recently sold in your area. This section is crucial as it directly impacts the valuation.
- Valuation Section: Here, the appraiser provides the estimated market value of your home. This value is based on an analysis of the comps, along with adjustments made for differences between your property and the comps.
- Photographs: Photos of your home and the comps are usually included for reference.
- Certification and Limiting Conditions: The appraiser’s certification and any conditions or disclaimers affecting the appraisal.
Reviewing the Report
- Verify Accuracy: Ensure all the basic information about your property is correct. Simple errors like the wrong number of bedrooms or incorrect square footage can significantly affect the appraisal value.
- Analyze the Comps: Check if the comparable properties listed are indeed similar to your home in size, style, age, and location. The selection of comps is a critical factor in determining your home’s appraised value.
- Understand Adjustments: Appraisers make adjustments to the value of comps based on differences from your home. Review these adjustments to see if they seem reasonable and fair.
- Note Any Missing Information: If you’ve made significant improvements to your home that the appraiser missed, it could affect the value. Similarly, if there are unique features or location advantages not considered, note these down.
- Read the Appraiser’s Comments: Often, the appraiser will include narrative comments explaining their reasoning and any issues they noted. This can provide insights into why your home was appraised at a certain value.
- If you find errors or have questions, make a list of these points.
- Consider discussing the report with a real estate professional or someone familiar with appraisals for additional insight.
- Prepare for a potential challenge or rebuttal based on your findings.
Understanding your appraisal report in detail provides a strong foundation for effectively challenging a low valuation.